CGFM MCQ 5 — Questions and Answers
Question 1: The Government Performance and Results Act (GPRA) Modernization Act of 2010 requires federal agencies to publish strategic plans covering a period of at least:
- Two years
- Three years
- Four years (Correct answer)
- Five years
Correct answer: Four years
The GPRA Modernization Act requires agencies to publish strategic plans covering a four-year period aligned with the presidential term, updated every four years.
Question 2: Under GASB standards, a government's enterprise fund reports a transaction where it sells water to the General Fund at standard rates. This is classified as a:
- Special item
- Transfer
- Quasi-external transaction reported as revenues and expenditures/expenses (Correct answer)
- Interfund loan
Correct answer: Quasi-external transaction reported as revenues and expenditures/expenses
Quasi-external transactions occur when one fund provides goods or services to another fund at arm's-length prices and are reported as revenues in the providing fund and expenditures/expenses in the receiving fund.
Question 3: A federal agency obligates funds in October for a contract to be completed in March of the next fiscal year. The obligation should be recorded:
- In March when the work is completed
- In October when the contract is signed (Correct answer)
- Ratably over the contract period
- When the invoice is received from the contractor
Correct answer: In October when the contract is signed
Federal accounting records obligations when the government enters into a binding commitment (e.g., signs a contract), regardless of when work is performed or payment is made.
Question 4: Which FASAB standard establishes the hierarchy of accounting standards for federal entities?
- SFFAS No. 1
- SFFAS No. 7
- SFFAS No. 34 (Correct answer)
- SFFAC No. 1
Correct answer: SFFAS No. 34
SFFAS No. 34 establishes the FASAB hierarchy, identifying the authoritative sources of generally accepted accounting principles for federal entities.
Question 5: Under the Improper Payments Elimination and Recovery Act (IPERA), an agency's program is considered 'high-priority' if its improper payment rate exceeds:
- 1.5% with payments over $10 million
- 2.5% with payments over $10 million, or total improper payments over $100 million (Correct answer)
- 5% of total program outlays
- 10% of total program expenditures
Correct answer: 2.5% with payments over $10 million, or total improper payments over $100 million
A program is deemed high-priority when its improper payment rate exceeds 2.5% of total program payments AND payments exceed $10 million, or total improper payments exceed $100 million regardless of rate.
Question 6: In government cost accounting, 'full cost' of a program output includes:
- Only direct costs attributable to the output
- Direct costs plus an allocated share of indirect and support costs (Correct answer)
- Personnel costs and supplies only
- Costs appropriated directly to the program in the budget
Correct answer: Direct costs plus an allocated share of indirect and support costs
Full cost includes all direct costs traceable to an output plus a fair allocation of indirect costs such as overhead, administrative support, and depreciation.
Question 7: A state government receives a federal block grant with broad spending authority across multiple health programs. Under GASB, this grant should be recognized as revenue:
- When the grant agreement is signed
- When resources are received and all eligibility requirements are met (Correct answer)
- When individual expenditures are made for allowable purposes
- When the final expenditure report is submitted to the federal government
Correct answer: When resources are received and all eligibility requirements are met
Under GASB's revenue recognition model for grants, revenues are recognized when resources are received (or measurable and available) and all eligibility requirements, including time requirements, are met.
CGFM MCQ 5
The Government Performance and Results Act (GPRA) Modernization Act of 2010 requires federal agencies to publish strategic plans covering a period of at least: